June 29, 2004

Warehouse Wars


These Chips Would Make a Nice Present Someday!

The Sideshow pointed out this interesting column by Jim Hightower on the differences between Sam's and Costco (the latter being where you can purchase a case of nifty poker chips like the ones pictured above).

Do big-time CEOs no matter how compassionate and cuddly they might be personally have to be SOBs on the job?

Yes, says the conventional wisdom of greater CorporateWorld. The bottom line dictates that wages and benefits be slashed and that offshoring be pursued with a vengeance. It's not personal, just business. "Look ye to Wal-Mart," boom the market gods, directing CEOs to follow the anti-labor, low-wage, no benefit, move-it-all-to-China ethic of this giant. The gods decree that no one can out-compete Wal-Mart, so best to imitate the beast.

Apparently, Jim Sinegal has been going to the wrong church. He's CEO of Costco, the profitable warehouse club retailer that's fast growing across the country. He takes a shockingly heretical view of his job, boasting of his company's fair treatment of employees: "We pay much better than Wal-Mart," Sinegal says. "That's not altruism. It's good business."

Indeed, Costco's pay is much, much, much better a full-time Costco clerk or warehouse worker earns more than $41,000 a year, plus they get terrific health care coverage. Wal-Mart workers get barely a third of that pay, plus a lousy health care plan. Costco even has unions!

Yet, Costco's labor costs are only about half of Wal-Mart's. How's that possible? One reason is that Costco workers feel valued, which adds enormously to their productivity, and they don't leave employee turnover is a tiny fraction of Wal-Mart's rapidly revolving door.

Another thing Sinegal rejects is offshoring: "We could move [some operations] to Bangladesh or somewhere. But what kind of message would that send to our employees? Not a good one, I think."

While Wal-Mart makes twice as much profit as Costco, Sinegal believes it's better business to make a nice profit, but not a killing, and to invest more in Costco's 92,000 workers. "I don't see what's wrong with an employee earning enough to be able to buy a house or having a health plan for the family," he says.

We have both Sam's and Costco around here, but I have lately been going to Sam's almost exclusively. The prices are pretty much the same, but I find the Sam's carries more of the stuff we like (except the poker chips). After reading this, I'm going to have to take another look at Costco, see if I can find some alternatives there. It would be nice to be able to do business with a place that seems to be going about it the right way.

Posted by Observer at June 29, 2004 07:00 AM
Comments

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Yeah, we have Sam's, Costco and BJ's around here. I go to BJ's because it has the cheapest gas around, but I heard they were bought by Sam's. If that is the case I will go to Costco exclusively. My only issue with Costco is that you can only use AmEx or Debit/cash/check. The quality of items is MUCH higher at Costco than at BJ's, but since I'm normally going for paper products it's not a big deal. Kirk & I use both though and we absolutely do not use Sam's.

Posted by: Liz on June 29, 2004 07:55 AM

I've always used and loved Costco. It's a much more upscale operation..

I read an article about Sinegal where he berated a produce manager for making too much profit one quarter when produce prices dropped. He said something like 'if our costs drop, pass some of that on to our customers. They deserve some of that too"

Posted by: Humbaba on June 29, 2004 08:42 AM

Well you know the most important thing right? They have to have "free examples" or the kids wont hear of it! *wink*

Posted by: Felicity on June 29, 2004 08:51 AM

Wal-Mart has a grisly labor-relations image (not to mention a deserved reputation for destroying small businesses in the towns where they move in) that I never go there by choice. I make it a point not to give my few dollars knowingly to bastards, and similar point to patronize businesses that do (or have done) social things I approve of. AT&T got my long distance business for a long time because (1) they weren't clearly worse than anyone else and (2) Bell Labs is (or was) a shining, magnificent crown jewel of science. Coke lost my business for a long time due to their attachment to Minute Maid, who was attached to Anita Bryant for a while. I absolutely refuse to buy Snapple because they paid Rush Limbaugh to do an ad for them, and it'll be a hell of a long time, if ever, before I forget that.

Irrational, perhaps, but if you want corporations ever to act as if they had the pretense of a soul, you have to punish them monetarily for making it very clear they -- and their leaderships -- are utterly soulless.

Posted by: Feff on June 29, 2004 02:22 PM

On a note not relating to the bit about Wal-Mart:

I have a friend who has a ncie chip case like that, although not as long -- it's fantastic, though.

Posted by: Polerand on June 30, 2004 01:31 AM
Posted by: on December 13, 2008 01:43 AM
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Posted by: on December 14, 2008 08:35 PM